Freakonomics by Levitt and Dubner

The cover of “Freakonomics” introduces the writers Steven D Levitt  as “ a rogue economist  exploring the hidden side of everything. This is not a book on economics in in the classical sense, not even macro economics. But it is an interesting  reading  mostly summarizing the outcome of various papers written by Steven D Levitt .  Co-author is  Stephen J Dubner, an award winning author and journalist.

In Levitt’s view economics is a science with excellent tools for gaining answers but with a serious shortage of interesting questions. To look for such questions he has worked on the borders of economics with psychology, criminology, sociology etc.

Sample the following questions :
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1. If drug peddlers make so much money, why do they still take shelter with their mothers?
   
2. Which house is more dangerous for a neighbors' child, the one where the keeper has a gun or the one which has a swimming pool?
3. What did really cause the crime rates in the USA to plunge during the last decades? Is it good policing, gun laws or mothers’ right to abortion given by the courts twenty years ago?
4. Do the real estate agents have the best interest of their clients at heart?
5. Why do black parents give their children names that may hurt their career prospects?
6. Is Sumo wrestling corrupt?
7. Do the school teachers cheat to meet high-stakes  testing standards?
8. Do more police translate into less crimes?
9. Do money really wins election?

To find answer he move upon piles to data, analyze them and then takes to some convincing and logical conclusion. Many cases, the answer is not the obvious and he has provided sound data based logic for the same.|

“ Through forceful storytelling and wry insight, they show that economics is, at root, the study of incentives, how people get what they want or need, especially when the other people want or need the same thing”

It is all about incentives !

CULT by Arindam Chaudhuri and A Sandeep

In CULT , as the name suggests, Leadership  and Business Strategy is ruthlessly defined. Written by Arindam Chaudhuri supported by A Sandeep, it  is “a view on vision, you won’t find anywhere”.  The Financial Times, London calls Arindam Chaudhuri  “the maverick management guru” and  The Hindustan Times calls him “the intellectual litterateur of the decade”. Honestly speaking, I did not take much notice of him, except for his annual  speeches on budget , until I read this book. I should say it is a must read, whether you ultimately agree with his ideas or not. Written in very powerful language, the book is an eye opener.

What should be the quality of a vision statement ? “ Vision has to be extremely number driven ( profit, sales, m-cap, employee productivity, or any other factor you may wish to include ) and time oriented ( in how much time what’s the visionary target to be achieved)” .

Do you really need a mission statement ? “ In privately held companies, accordingly to Arindam not needed. In large organization the mission statement is inarguably one of the most important public relationship exercises undertaken by any organization to be accepted as ethical, society friendly, value based and for the benefit of the stakeholders.”

The second chapter of the book is in all praise for authoritarian leadership. Sample this “ This is because while leadership styles which are more democratic and are wonderful to be read and applied, the fact of the matter is that such styles can be successful only when the people you are leading are most mature, responsible and ambitious. But finding such mature people to work with is near impossible!”

In technology driven world today according to Arimdam, the leaders have realized that given a choice, most employees will be underproductive. So more and more technologies in the form IT and other methods are used to force them to deliver.

About Apple Andrew Keen wrote “ There is not an ounce of democracy in Apple. That’s what makes it a paragon of such traditional corporate values as top-down leadership,  sharply hierarchical organization and centralized control. And today it is one of the most valuable IT company of the world.

The Virgin’s  method of using CEO as a brand has been praised to the hilt. But Vijay Mallya has been ignored, as the argument may not fit here with Kingfisher debacle. `

Summarizing the first three chapter he writes “ have an audacious vision at every level, whiplash employees into submission so they work, ensure that the world recognizes your face as being the face of the corporation and finally have a to-hell-with-everyone-else attitude hanging around”.

He does not like the split of roles between the CEO and the Chairman. As per McKinsey nearly 80% of the S&P 500 companies combine both the roles into one. It appears also in a Christian & Timbers study it was shown that the stockholders’ return was 5% lower in European Companies who implemented the spilit.

Successful entrepreneurs are moderate risk takers not gamblers.  As American Management Association quoted in the book “ Great Leaders are informed risk takers. They act decisively, not recklessly, to maximize “lucky” breaks.

He quotes Dr Sheila Dikshit, the Chief Minister of Delhi in the book. “ For me a leader is a person who people believe is capable of taking risks. The greatest requirement for a leader, however, is communication. If you are unable to communicate, you cannot lead or manage” 

Hold regular meetings and punish the guilty accordingly. If you thought that giving the employee a stick in the public was unethical, think again. That is not what successful leaders like Jobs have thought.

Putting the right team in place is not adequate, one has to engage with the team regularly, effectively and with total clarity, they cannot be left in the autopilot mode, howsoever talented they are. “ if you want to a real transformation sweeping through your organization, make internal meeting mandatory, and extremely regular. “

Merger and Acquisitions he calls as Murder and Acquisition. One IBAC research shows 90% of the M&As will fail to live upto expectations. Most of the CEOs now prefer organic growth and extensive partnership compared to M&A. 

As per the writer the four major differentiators for any organization in terms of capturing market share are (a) Service (b) Style (c) technological superiority, perceived or real and (d) quality.  “ Why would you want to know through a sticker everyday that there is ‘INTEL INSIDE’ your laptop? That is a shrewd technology positioning by Intel”

The book deals with many other topics like the power of MBA, Multi-tasking, Loyalty, Globalization, R&D, SBU, etc. etc. An interesting reading !

“Smart Trust” by Stephen Covey and Greg Link (with Rebecca R Merrill), is a book on use of trust for creating prosperity, energy and joy in a low trust world. Smart Trust is different from blind trust and distrust. Trust is the essential ingredient for better teamwork. But it is not easy. More often than not, we like others to trust us, while we not so much trusting the other. And the reverse is also true. There are certainly one or two examples in every one’s life, when one has faced colossal damage, emotional, monetary or both, by trusting another person. Con artists thrive on their ability to make others trust them blindly, and make millions, if not billions, just by simple heartless cheating.

Between Blind Trust and Distrust, there is a third alternative the “Smart Trust”, which starts at the third chapter of the book. “Knowing a great deal, is not the same as being smart; intelligence is not information alone, but also judgement”.

Smart Trust is judgement. It is a competency and a process that enables us to operate with high trust in a low trust world. It minimizes risk and maximizes possibilities. It optimizes two key factors (a) propensity to trust and (b) analysis. The propensity to trust is primarily a matter of heart. Having high propensity to trust, is a vital dimension of Smart Trust, as long as it is combined with high analysis.

 “Trust but verify”, is the Russian proverb.

Smart trust has three elements :

1.      Opportunity : What is the opportunity ahead, what are you trusting with, what are its dimension. Grameen Bank for example trusts that all its borrower will return the money, Nexflix trusts that all its members will return the DVDs. If this basic is not there probably the business model is not there.

2.      Risk : To trust is to take a take a risk. In organization perspective to not to trust is also to take a risk. Smart Trust is to manage this risk wisely. The task is always to distribute the trust in a manner that the risk is minimised, and that will maximize the prosperity, energy and joy. We have to understand (a) possibilities of the outcome (b) likelihood of outcomes and (c) visibility of the outcome. In short what is the degree of the risk. The need of analysis will depend on the degree of the risk. For example, the need of the written routine to be followed for every process in a nuclear submarine cannot be the same as a newspaper vending machine. Still both the activities have some routine process, only the complexity differs.

3.      Credibility : Just by trusting another person, you cannot get the desired result or output from him. Credibility again has two parts (a) character and (b) competence. If a person does not have competence, even being trustworthy he cannot bring success and joy, because he cannot perform. On the other hand trusting a competent person, who lacks integrity is also not a good option, as he might turn out to be a cheater in the ultimate.

The book has many illustration and stories, to make the things lively. The action points for practising smart trusts are as follows :

a.      Choose to Believe in Trust

b.      Start with Self

c.      Declare your intent and assume positive intent in others

d.      Do what you say you are going to do.

e.      Lead out in extending trust to others.

While doing the above never forget to analyze and putting a proper framework for analysis.

One of the may accolades received by the book is from Yang Yuanqing, CEO Lenovo which says :

‘“Smart Trust” delivers ideas that are thought provoking, tools that work, and a perspective that I think is essential for survival and success on the global stage.”